A shareholders' agreement allows private companies with multiple shareholders to establish rules around ownership of the business, the powers of each shareholder, and how to resolve disputes. Key issues addressed in such an agreement include financing, management, dividends, share transfers, and procedures for dealing with deadlocks or changes in personal circumstances. Having this agreement reduces the likelihood of disagreements between shareholders and establishes procedures for valuing shares if a shareholder wants to sell.

2.  Many Private limited companies
,However very few, understand the
problems they are storing up for
themselves by not having a formal
agreement in place to set out the
ground rules for their ownership
of the business, determine the
powers of each shareholder or
provide a method for resolving
disputes between the owners.

3. Ashareholders'
agreement lets the members
of a company to agree a
range of matters relating
to their involvement in the
company, so that they will
know what will happen in
certain circumstances,
rather than there either
being nothing to govern

4. Some of the main issues which might
be addressed in a shareholders’
agreement include:
 Financing of the company
 Management of the company
 Dividend Policy
 Share transfers
 Dealing with deadlock

5.  Themembers of any
company with more than one
shareholder benefit from
having a shareholders'
agreement to govern issues
between them not only as
members of the company –
which can be included in the

6.  Without a shareholders’ agreement it is
more likely that a disagreement
between the shareholders would come
about, particularly if things start to
go wrong.
 In a private company the value may be
difficult to assess. the shareholders’
agreement can set a procedure and
formula.
 If personal circumstances change or,
for example, there is an age difference,
one may wish to sell his/her shares,
whilst the others want to carry on. The